Ex-HSBC Banker Sees Contentious ESG Label Dethroning Green Bonds

A former HSBC Holdings Plc banker says one of the most criticized sustainable bond structures on Wall Street has the potential to dominate the roughly $6 trillion ethical debt market.

Sustainability-linked bonds, which tie interest payments to a company’s environmental or social goals, have to build trust and transparency for the market to grow, said Daniel Klier, the chief executive officer of ESG Book, a data provider. Still, SLBs have more potential than the dominant green bond market that will likely hit a ceiling, according to Klier, the former global head of sustainable finance at HSBC.

Borrowers can ...